US, United in merger talks to create one of world’s largest airlines
Stock market shares of both US Airways Group and UAL Corp., the parent of United Airlines, climbed amidst reports of merger talks to create one of the world’s largest airlines.
The New York Times was the first to report that the two airlines are “deep in merger discussions."
The talks, which have been going on for about two weeks, are not the first between the two airlines, sources said.
"UAL has been supportive of consolidation for a long time," UAL Chief Financial Officer Kathryn Mikells said recently..
US Airways Chief Financial Officer Derek Kerr said that his airline was open to merging with another US carrier.
"Consolidation is one of the major ways this industry can become profitable," Kerr said.
No deal would be announced for several weeks.
Talks about a merger could still fall apart, reports said, citing those close to the situation.
An alert posted on the Times web site said US Airways would be the acquirer.
The two carriers had come close to merging with each other in 2008, Reuters said.
“Battered and bruised from the recession but facing an industry-wide recovery in demand and revenue, the two legacy carriers apparently believe now is the time to combine operations to lower costs and shake out overlapping capacity,” reports MarketWatch.
United also brings its transpacific routes to the table, a market in which US Airways has no presence.
Neither company has a strong cash position, which raises the possibility any deal could be in the form of a stock swap.
By David Wilkening
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